Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On February 7, 2023, Latch, Inc. (the “Company”) received a Staff Delisting Determination (the “Staff Determination”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that Nasdaq has initiated a process that could result in the delisting of the Company’s securities from Nasdaq as a result of the Company not being in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”), which requires listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission (the “SEC”). The Staff Determination has no immediate effect and will not immediately result in the suspension of trading or delisting of the Company’s shares of common stock or warrants.
The Company intends to appeal the Staff Determination before a Nasdaq Hearings Panel (the “Hearings Panel”) and seek a further stay of any suspension or delisting action pending the hearing process in accordance with the procedures set forth in the Staff Determination.
The Staff Determination was issued because the Company has not filed its Quarterly Reports on Form 10-Q for the quarterly period ended June 30, 2022 (the “Second Quarter Form 10-Q”) and September 30, 2022 (the “Third Quarter Form 10-Q” and, together with the Second Quarter Form 10-Q, the “Delinquent Reports”) by the Extension Deadline (defined below).
As previously disclosed, Nasdaq had granted the Company a period of 180 calendar days from the prescribed due date of the Second Quarter Form 10-Q, or until February 6, 2023 (the “Extension Deadline”), to file the Delinquent Reports to regain compliance with the Listing Rule. The Company previously disclosed the delay in and circumstances behind the late filing of each of the Delinquent Reports in Notifications of Late Filing on Form 12b-25, filed with the SEC on August 10, 2022 and November 10, 2022, respectively.
The Company’s request for a hearing before the Hearings Panel (the “Request”) to appeal the Staff Determination must be made no later than 4:00 p.m. Eastern Time on February 14, 2023. The Request will automatically stay the suspension of the trading of the Company’s securities for a period of 15 days from the date of the Request. In connection with the Request, the Company also intends to request that the Staff Determination be further stayed pending the hearing process. However, there can be no assurance that the Hearings Panel will grant the Company’s request for a stay pending the hearing process. According to the Staff Determination, hearings are typically scheduled to occur approximately 30-45 days after the date of a company’s hearing request. Following the hearing, the Hearings Panel will issue a decision, which the Company may further appeal to the Nasdaq Listing Council for review.
The Company intends to prepare the financial statements for (i) the periods affected by the previously disclosed restatement, (ii) the periods included in the Delinquent Reports and (iii) the year ended December 31, 2022 (collectively, the “Relevant Financial Statements”), after which the Relevant Financial Statements will be subject to audit and/or review by the Company’s independent registered public accounting firm. Following completion of the audit or review, as applicable, of the Relevant Financial Statements, the Company plans to file annual and quarterly reports including the Relevant Financial Statements. There can be no assurance that the Company will be able to file the foregoing annual and quarterly reports within the extension period granted by the Hearings Panel, if any.